German Economy Gradually Emerging from Prolonged DownturnThe German economy, after enduring three years of stagnation, is forecasted to see gradual improvement in 2026. Economic projections from major institutions such as the Bundesbank and the German Institute for Economic Research (DIW) suggest that the recovery remains fragile, with notable growth expected only in the medium term. Looking ahead to 2027, the Bundesbank predicts that the German economy will expand by 1.3 percent, with further growth of 1.1 percent projected for 2028. Despite this, the Bundesbank remains optimistic that rising wages and a gradually improving employment landscape will eventually support real incomes and stimulate household consumption. In summary, while the German economy is showing early signs of recovery after several years of stagnation, the pace of growth is expected to remain moderate in the short term.

Source: The Munich Eye December 19, 2025 17:32 UTC